Summarized Group Cash Flow Statement

Eni’s Summarized Group Cash Flow Statement derives from the statutory statement of cash flows. It enables investors to understand the connection existing between changes in cash and cash equivalents (deriving from the statutory cash flows statement) and in net borrowings (deriving from the summarized cash flow statement) that occurred in the reporting period. The measure which links the two statements is represented by the free cash flow which is calculated as difference between the cash flow generated from operations and the net cash used in investing activities. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange rate differences; and (ii) change in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange rate differences. The free cash flow is a non-GAAP measure of financial performance.

Summarized Group Cash Flow Statement ^(a)

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2011	(€ million)	2012	2013	Change
7,877	Net profit - continuing operations	4,944	4,972	28
	Adjustments to reconcile net profit to net cash provided by operating activities:
8,606	- depreciation, depletion and amortization and other non monetary items	11,349	9,578	(1,771)
(1,176)	- net gains on disposal of assets	(875)	(3,770)	(2,895)
9,918	- dividends, interests, taxes and other changes	11,925	9,162	(2,763)
(1,696)	Changes in working capital related to operations	(3,373)	486	3,859
(9,766)	Dividends received, taxes paid, interest (paid) received during the period	(11,614)	(9,459)	2,155
13,763	Net cash provided by operating activities - continuing operations	12,356	10,969	(1,387)
619	Net cash provided by operating activities - discontinued operations	15		(15)
14,382	Net cash provided by operating activities	12,371	10,969	(1,402)
(11,909)	Capital expenditure - continuing operations	(12,761)	(12,750)	11
(1,529)	Capital expenditure - discontinued operations	(756)		756
(13,438)	Capital expenditure	(13,517)	(12,750)	767
(360)	Investments and purchase of consolidated subsidiaries and businesses	(569)	(317)	252
1,912	Disposals	6,014	6,360	346
627	Other cash flow related to capital expenditure, investments and disposals	(136)	(253)	(117)
3,123	Free cash flow	4,163	4,009	(154)
41	Borrowings (repayment) of debt related to financing activities ^(b)	(83)	(3,983)	(3,900)
1,104	Changes in short and long-term financial debt	5,947	1,778	(4,169)
(4,327)	Dividends paid and changes in non-controlling interests and reserves	(3,746)	(4,231)	(485)
10	Effect of changes in consolidation and exchange differences	(16)	(50)	(34)
(49)	NET CASH FLOW	6,265	(2,477)	(8,742)

Changes in net borrowings

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2011

(€ million)

2012

2013

Change

(a)

For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flow to Statutory Schemes”.

(b)

This item includes investments in certain financial instruments not related to operations (securities, escrow accounts) to absorb temporary surpluses of cash or as a part of our ordinary management of financing activities. Due to their nature and the circumstance that they are very liquid, these financial instruments are netted against finance debt in determining net borrowings. Cash flows of such investments/disposals were as follows:

3,123

Free cash flow

4,163

4,009

(154)

Net borrowings of acquired companies

(2)

(21)

(19)

(192)

Net borrowings of divested companies

12,446

(16)

(12,462)

(517)

Exchange differences on net borrowings and other changes

(340)

342

682

(4,327)

Dividends paid and changes in non-controlling interest and reserves

(3,746)

(4,231)

(485)

(1,913)

CHANGE IN NET BORROWINGS

12,521

(12,438)

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2011	(€ million)	2012	2013	Change
	Financing investments:
(21)	- securities		(5,029)	(5,029)
(26)	- financing receivables	(1,131)	(104)	1,027
(47)		(1,131)	(5,133)	(4,002)
	Disposal of financing investments:
71	- securities	4	25	21
17	- financing receivables	1,044	1,125	81
88		1,048	1,150	102
41	Cash flows of financial investments not related to operation	(83)	(3,983)	(3,900)

Net cash provided by operating activities (€10,969 million) and proceeds from disposals of €6,360 million funded cash outflows relating to capital expenditure totalling €12,750 million and investments (€317 million) and dividend payments and other changes amounting to €4,231 million (of which €1,993 million relating to 2013 interim dividend) also repaying down the Group net debt by €83 million from December 31, 2012. Net cash provided by operating activities was positively influenced by higher receivables due beyond the end of the reporting period, being transferred to financing institutions compared to the amount transferred at the end of the previous reporting period (up €552 million; from €2,203 million as of December 31, 2012 to €2,755 million as of December 31, 2013). Cash from disposals largely related to the sale of the 28.57% stake in Eni East Africa, currently retaining an interest of 70% in the Area 4 mineral property in Mozambique to China National Petroleum Corporation (€3,386 million), the divestment of the 11.69% interest in the share capital of Snam (€1,459 million), the 8.19% interest in the share capital of Galp (€830 million) and marginal assets in the Exploration & Production Division.

Capital expenditure

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2011	(€ million)	2012	2013	Change	% Ch.
9,435	Exploration & Production	10,307	10,475	168	1.6
754	- acquisition of proved and unproved properties	43	109
1,210	- exploration	1,850	1,669
7,357	- development	8,304	8,580
114	- other expenditure	110	117
192	Gas & Power	225	232	7	3.1
184	- marketing	212	209
8	- international transport	13	23
866	Refining & Marketing	842	619	(223)	(26.5)
638	- refining, supply and logistics	622	444
228	- marketing	220	175
216	Versalis	172	314	142	82.6
1,090	Engineering & Construction	1,011	902	(109)	(10.8)
10	Other activities	14	21	7	50.0
128	Corporate and financial companies	152	190	38	25.0
(28)	Impact of unrealized intragroup profit elimination	38	(3)	(41)
11,909	Capital expenditure - continuing operations	12,761	12,750	(11)	(0.1)
1,529	Capital expenditure - discontinued operations	756		(756)	..
13,438	Capital expenditure	13,517	12,750	(767)	(5.7)

In 2013, capital expenditure amounted to €12,750 million (€12,761 million 2012) relating mainly to:

development activities deployed mainly in Norway, the United States, Angola, Congo, Italy, Nigeria, Kazakhstan, Egypt and the UK and exploratory activities of which 98% was spent outside Italy, primarily in Mozambique, Norway, Congo, Togo, Nigeria, the United States and Angola as well as acquisition of new licenses in the Republic of Cyprus and in Vietnam;
upgrading of the fleet used in the Engineering & Construction Division (€902 million);
refining, supply and logistics in Italy and outside Italy (€444 million) with projects designed to improve the conversion rate and flexibility of refineries, in particular at the Sannazzaro Refinery, as well as the upgrade of the refined product retail network in Italy and in the rest of Europe (€175 million);
initiatives to improve flexibility of the combined cycle power plants (€121 million).

Reconciliation of net profit and shareholders’ equity of the parent company Eni SpA to consolidated net profit and shareholders’ equity

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Summarized Group Balance Sheet

(€ million)

December 31, 2012

December 31, 2013

Items of Summarized Group Balance Sheet
(where not expressly indicated, the item derives directly from the statutory scheme)

Notes to the Consolidated Financial Statements

Partial amounts from statutory scheme

Amounts of the sum-
marized Group scheme

Partial amounts from statutory scheme

Amounts of the sum-
marized Group scheme

(a)	For details on net borrowings see also note No. 26 to the Consolidated Financial Statements.

Fixed assets

Property, plant and equipment

63,466

62,506

Inventories - compulsory stock

2,538

2,571

Intangible assets

4,487

3,877

Equity-accounted investments and other investments

9,347

6,961

Receivables and securities held for operating activities

(see note 9 and note 19)

1,457

1,607

Net payables related to capital expenditure, made up of:

(1,142)

(1,256)

- Receivables related to disposals

(see note 10)

209

- Receivables related to disposals

(see note 21)

752

702

- Payables related to capital expenditure

(see note 23)

(2,103)

(2,046)

Total fixed assets

80,153

76,266

Net working capital

Inventories

8,496

7,883

Trade receivables

(see note 10)

19,966

21,213

Trade payables

(see note 23)

(14,993)

(15,529)

Tax payables and provisions for net deferred tax liabilities, made up of:

(3,204)

(3,005)

- Income tax payables

(1,622)

(742)

- Other tax payables

(2,162)

(2,268)

- Deferred tax liabilities

(6,740)

(6,723)

- Other tax liabilities

(see note 31)

(1)

(26)

- Current tax assets

771

802

- Other current tax assets

1,230

825

- Deferred tax assets

5,027

4,662

- Other tax assets

(see note 21)

293

465

Provisions

(13,603)

(13,167)

Other current assets and liabilities:

2,473

2,030

- Securities held for operating purposes

(see note 9)

201

202

- Receivables for operating purposes

(see note 10)

440

488

- Other receivables

(see note 10)

6,751

6,648

- Other (current) assets

1,624

1,325

- Other receivables and other assets

(see note 21)

3,355

2,516

- Advances, other payables

(see note 23)

(6,485)

(6,023)

- Other (current) liabilities

(1,437)

(1,448)

- Other payables and other liabilities

(see note 31)

(1,976)

(1,678)

Total net working capital

(865)

(575)

Provisions for employee post-retirement benefits

(1,374)

(1,245)

Assets held for sale including related liabilities

155

2,156

made up of:

- Assets held for sale

516

2,296

- Liabilities related to assets held for sale

(361)

(140)

CAPITAL EMPLOYED, NET

78,069

76,602

Shareholders’ equity including non-controlling interest

62,558

61,174

Net borrowings

Total debt, made up of:

24,463

25,879

- Long term debt

19,279

20,988

- Current portion of long term debt

2,961

2,149

- Short-term financial liabilities

2,223

2,742

less:

Cash and cash equivalents

(7,765)

(5,288)

Securities held for trading and other securities held for non-operating purposes

(see note 9)

(34)

(5,037)

Financing receivables for non-operating purposes

(see note 10)

(1,153)

(126)

Total net borrowings ^(a)

15,511

15,428

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

78,069

76,602

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Summarized Group Cash Flow Statement

(€ million)	2012		2013
Items of Summarized Cash Flow Statement and confluence/reclassification of items in the statutory scheme	Partial amounts from statutory scheme	Amounts of the sum- marized Group scheme	Partial amounts from statutory scheme	Amounts of the sum- marized Group scheme
Net profit - continuing operations		4,944		4,972
Adjustments to reconcile net profit to net cash provided by operating activities:
Depreciation, depletion and amortization and other non monetary items		11,349		9,578
- depreciation, depletion and amortization	9,538		9,303
- impairment of tangible and intangible assets, net	4,023		2,400
- share of profit (loss) of equity-accounted investments	(278)		(252)
- other net changes	(1,945)		(1,878)
- net changes in the provisions for employee benefits	11		5
Net gains on disposal of assets		(875)		(3,770)
Dividends, interest, income taxes and other changes		11,925		9,162
- dividend income	(431)		(400)
- interest income	(108)		(155)
- interest expense	803		709
- income taxes	11,661		9,008
Changes in working capital related to operations		(3,373)		486
- inventory	(1,395)		320
- trade receivables	(3,184)		(1,363)
- trade payables	2,029		706
- provisions for contingencies	338		58
- other assets and liabilities	(1,161)		765
Dividends received, taxes paid, interest (paid) received during the period		(11,614)		(9,459)
- dividend received	988		684
- interest received	91		108
- interest paid	(825)		(944)
- income taxes paid, net of tax receivables received	(11,868)		(9,307)
Net cash provided by operating activities - continuing operations		12,356		10,969
Net cash provided by operating activities - discontinued operations		15
Net cash provided by operating activities		12,371		10,969
Capital expenditure		(13,517)		(12,750)
- tangible assets	(11,222)		(10,864)
- intangible assets	(2,295)		(1,886)
Investments and purchase of consolidated subsidiaries and businesses		(569)		(317)
- investments	(391)		(292)
- consolidated subsidiaries and businesses	(178)		(25)
Disposals		6,014		6,360
- tangible assets	1,229		514
- intangible assets	61		16
- changes in consolidated subsidiaries and businesses	3,521		3,401
- investments	1,203		2,429
Other cash flow related to capital expenditure, investments and disposals		(136)		(253)
- securities	(17)		(5,048)
- financing receivables	(1,634)		(989)
- change in payables and receivables relating to investments and capitalized depreciation	54		48
reclassification: purchase of securities and financing receivables for non-operating purposes	1,131		5,133
- disposal of securities	52		33
- disposal of financing receivables	1,578		1,565
- change in payables and receivables	(252)		155
reclassification: disposal of securities and financing receivables held for non-operating purposes	(1,048)		(1,150)
Free cash flow		4,163		4,009
Borrowings (repayment) of debt related to financing activities		(83)		(3,983)
*reclassification:* purchase of securities and financing receivables held for non-operating purposes	(1,131)		(5,133)
*reclassification:* disposal of securities and financing receivables held for non-operating purposes	1,048		1,150
Changes in short and long-term finance debt		5,947		1,778
- proceeds from long-term finance debt	10,484		5,418
- payments of long-term finance debt	(3,784)		(4,669)
- increase (decreases) in short-term finance debt	(753)		1,029
Dividends paid and changes in non-controlling interest and reserves		(3,746)		(4,231)
- net capital contributions/payments by/to non-controlling interest			(4)
- dividends paid by Eni to shareholders	(3,840)		(3,949)
- dividends paid to non-controlling interest	(539)		(251)
- disposal (acquisition) of interests in consolidated subsidiaries	604		(28)
- treasury shares sold by consolidated subsidiaries	29		1
Effect of exchange differences on cash and cash equivalents		(12)		(37)
Effect of changes in consolidation area (inclusion/exclusion of significant/insignificant subsidiaries		(4)		(13)
Net cash flow for the period		6,265		(2,477)

Summarized Group Cash Flow Statement